Kroger-Fred Meyer deal brings changes in Arizona

By Cliff Peale, Post staff reporter

The first real impact of the $13 billion merger between Cincinnati's Kroger Co. and Fred Meyer Inc. will come this summer when Kroger closes a Phoenix distribution center operated by its Fry's Food Stores unit, the company said Monday.

The closing, contingent on Kroger and Fred Meyer gaining federal regulators' approval for their deal, will affect up to 500 workers.

Distribution of goods to about 60 Fry's stores in the state will come through a Fred Meyer distribution hub in nearby Tolleson, Ariz.

Kroger officials said the closing would cut costs and eliminate duplication of services for the same set of customers.

They have said that by cutting costs in distribution, manufacturing, purchasing and information systems, the combined company will save $75 million in the first year and $225 million a year within three years.

Fred Meyer shareholders were expected to overwhelmingly approve the company's acquisition by Kroger at a meeting in Los Angeles Monday afternoon, and Kroger shareholders were to vote on the deal today in Cincinnati.

Officials still are negotiating with the Federal Trade Commission about final approval for the deal.

Arizona was the one market where there was significant overlap between the two companies' stores.

Kroger's strength is in the Southeast and Midwest and Fred Meyer stores are mostly in the Western states.

The companies already have announced several changes in Arizona, including:

Smitty's stores, part of the Fred Meyer-owned Smith's Food and Drug chain in Arizona and other Western states, have been converted to Fred Meyer stores.

After the merger is complete, 37 Smith's Food and Drug stores will be changed to Fry's, Kroger's nameplate in Arizona.

Overall, the combined company will operate 2,200 grocery stores nationwide, with 300,000 employees and $43 billion in sales, company officials report.

Publication date: 04-13-99

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